A planned reform of EU corporate taxation would substitute national business tax rules, EU Economy Commissioner Paolo Gentiloni said Monday.
The “Business in Europe Framework for Income Taxation,” or BEFIT, would “replace national corporate tax systems for the companies in scope, thus reducing compliance costs and barriers to cross-border investment,” he said at an EU tax event Monday.
It would draw on a global deal on a two-legged corporate tax that was agreed between more than 130 countries in 2021, and consists of the reallocation of taxable profits (known as Pillar One) and of a minimum corporate tax base of 15 percent (known as Pillar Two), the latter of which the EU is struggling to ratify due to subsequent vetoes first by Poland and now by Hungary.
But it would “go further,” Gentiloni said. It would have “the key features of a simplified common tax base and allocation of taxable profits between member states,” thus diminishing taxation policies within the bloc whereby countries seek to attract businesses by luring them with favorable tax regimes.
Taxation initiatives are always tricky as they require consent of all 27 EU countries.
CORRECTION: This article has been updated to correct the schedule for the reform.